Juncker plan will create two million jobs, says ILO

Jean-Claude Juncker’s €315bn (£235bn) investment blueprint has the potential to ease Europe’s unemployment crisis by creating more than two million new jobs, the International Labour Organisation said.

The Geneva-based ILO, the tripartite body that represents workers, employers and governments, backed the plan announced by the new president of the European commission but said the jobs harvest would only be reaped if the plan was properly designed.

Raymond Torres, director of the ILO Research Department, said the plan to use a small amount of public money to lever in private capital “can complement the monetary measures recently announced by the European Central Bank, by encouraging enterprise investment, growth and job creation”.

But the ILO said there would only be a significant dent in EU unemployment if the Brussels plan included a significant portion of private investment, especially in job-rich small businesses. It also needed to ensure that the EU countries with the highest levels of joblessness were targeted by the fund. “In the absence of these two conditions, the plan will make little or no difference to the EU employment outlook.”

The ILO said it was also important to avoid a “race to the bottom” in terms of wages and employment rights. “It is crucial for the plan to be accompanied by a longer-term employment strategy that focuses on quality jobs and balanced reforms”, it said.

When first announced last year, Juncker’s plan was greeted with some scepticism, with critics doubting that the €21bn of public money would leverage in almost €300bn of private investment. But the ILO said it might foster competitiveness and create jobs at a time when the employment outlook was “fragile and uneven”.

The jobless rate across the 28-nation EU is close to 10%, three percentage points higher than it was before the start of the global economic crisis in 2008. Half of those who are unemployed have been workless for more than a year.

“There are also wide cross-country disparities, with unemployment rates in southern Europe and parts of central Europe stubbornly high”, the ILO said. As of the third quarter 2014, the unemployment rate in Spain was over 23% and in Greece above 25%. Three years earlier, both countries had unemployment rates of 8%.

“These developments have imposed huge economic and social costs, with the worst impacts in southern Europe but with damage to households and working people across the region,” said Sandra Polaski, ILO deputy director-general for policy. “The urgency to address these losses increases with every passing day.”